Reports of property developers using delay tactics to swindle Victorians who purchase properties off-the-plan have been on the rise, and the Andrews Labor Government is determined to put a stop to this with the Sale of Land Amendment Bill 2018.
What does the amendment mean?
The amendment rules that off-the-plan contracts cannot be terminated by a vendor under a sunset clause unless ordered by the Supreme Court of Victoria or by the purchaser through written consent.
“This is about restoring balance and improving consumer protections so that Victorians can enter the property market with confidence. We’re giving Victorians who buy off-the-plan more control and peace of mind by cracking down on dodgy developers,” said Marlene Kairouz, Minister for Consumer Affairs.
To provide some context, off-the-plan contracts usually have a sunset clause provision that permits a vendor (typically a professional developer) to end the contract if the subdivision plan is not registered by a specified date.
Under these rules, some developers had been exploiting the sunset clauses by intentionally delaying the completion of their project’s construction so that the signed contracts of sale can be dismissed, and the property can be sold again at a more expensive price.
With the Sale of Land Amendment, the following modifications will also be implemented: disallowing public auctions of land before 1:00pm on ANZAC Day, bringing the industry in line with the standard restricted business hours for the day; reinforcing the offence of concealing material facts about a property, and enabling guidelines to aid vendors and agents in understanding what a material fact is likely to be – a property’s past history as a clandestine drug laboratory, for example.
Additionally, the bill will introduce protections for people who purchase options to buy land as part of land banking schemes, including requiring money paid for options to be held in a trust.
Finally, it will prohibit specific terms contracts and rent-to-buy arrangements, with significant fines and potential jail time for vendors and third-party intermediaries to act as a strong deterrent.
“The changes implement key outcomes of the Consumer Property Law Review’s examination of the Sale of Land Act 1962 (The Act),” the disclosure stated.
It is important to note that the aforementioned changes will apply to all existing off-the-plan contracts.
